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Stocks put on their own display of fireworks last week, shooting higher to kick off the third quarter, but the show fizzled abruptly the day after the July Fourth holiday, as renewed fears about the financial sector, slowing world economies, and job growth dampened enthusiasm.

The Dow Jones Industrial Average fell 107.62 points for the week, closing Friday at 12,772.47 after posting losses the last two days of the week. The S&P 500 shed 7.48 points to end the week at 1354.68, also after two straight days. The Nasdaq Composite snapped a four-day winning streak Friday, but ended higher on the week by 2.28 points, bringing it to 2937.33. The surging Russell 2000 index of small-cap stocks declined for two straight days at the end of the week but still added 8.65 points for the week to close at 807.14, its fifth consecutive week of gains.

As Americans fired up their barbecue grills Wednesday for an Independence Day cookout, the former chief executive of banking giant
BarclaysBCS -1.6212018906144496%Barclays PLC ADSU.S.: NYSEUSD14.5699
-0.2401-1.6212018906144496%
/Date(1427829254454-0500)/
Volume (Delayed 15m)
:
2473871
P/E Ratio
N/AMarket Cap
60537717741.781
Dividend Yield
5.738735889785649% Rev. per Employee
403750More quote details and news »BCSinYour ValueYour ChangeShort position
(ticker: BCS), U.S.-born Robert Diamond, found himself in a grilling of a different kind; members of Parliament questioned him for three hours on his role in Barclays traders' manipulation of Libor, or the London interbank offered rate. Libor is a measure of what banks pay to borrow from each other and, perhaps more significantly, a yardstick for determining the rates on mortgage and other contracts.

Diamond, who had resigned his post the day before his appearance in Parliament, suggested that the price-fixing practice was more widespread than just Barclays, and that it was known to regulators.

The specter of an accelerating slowdown across global economies spooked markets, too, as the European Central Bank, Bank of England, and China's central bank eased interest rates Thursday, aiming to stimulate borrowing and spending. The moves weren't coordinated but indicated heightened concerns about the health of the euro zone and serious slackness in China, the world's second-largest economy after the U.S.

A monthly U.S. jobs report released Friday also disappointed, and prompted renewed speculation on whether the U.S. Federal Reserve will conduct another round of quantitative easing. The jobless rate held steady at 8.2% as employers, mostly in the private sector, added a paltry 80,000 to payrolls.

A broader measure of unemployment that counts both the underemployed and discouraged workers moved higher by 0.1% point to 14.9%. A total of 225,000 jobs were added in the three months ended June 29, the weakest quarter for job growth since 2010. Still, there was a smattering of positive notes in the jobs report: Average hourly earnings and hours worked ticked higher, temporary jobs rose, and household employment increased.

"The path to profits has been through productivity gains," says Donald Rissmiller, chief economist at Strategas Research Partners, an investment research firm in Manhattan, noting that profit growth has slowed and profit margins are under pressure. "If we can't get productivity up, that's a problem. The U.S. economy doesn't behave well at a stalled speed. That's the risk to the market: What does muddle-through growth do to profits?"

In another sign of weakness, U.S. manufacturing shrank in June for the first time since July 2009, according to the Institute for Supply Management, as exports dropped and new orders plummeted at the fastest rate since October 2011, in the aftermath of the 9/11 terrorist attacks. The index registered 49.7 in June, below the level of 50 that typically separates a manufacturing expansion from a contraction.

Retail sales in June posted the weakest growth in more than two years despite a spate of promotions and sharply lower gasoline prices, raising concerns about consumer confidence.

All those shoppers staying home must much be watching video: Investors tuned into
NetflixNFLX -0.10885770404903329%Netflix Inc.U.S.: NasdaqUSD422.11
-0.46-0.10885770404903329%
/Date(1427829260276-0500)/
Volume (Delayed 15m)
:
1198101
P/E Ratio
95.00675675675676Market Cap
25564640767.3499
Dividend Yield
N/ARev. per Employee
2246800More quote details and news »NFLXinYour ValueYour ChangeShort position
(NFLX) in a big way, pushing the stock up almost 20% for the week, to $81.89—a level not reached since early May. The subscription-based provider of television shows and films via the Internet and DVDs gained attention after its chief executive, Reed Hastings, boasted on his Facebook page on July 3 that Netflix subscribers streamed one billion hours of video in June, a new record for the service. At that level, Netflix qualifies as the most-watched channel in either broadcast or cable television in the U.S., according to analyst Richard Greenfield of BTIG. Citigroup Internet analyst Mark Mahaney on Monday reiterated a Buy on Netflix and affirmed his $130 price target on the shares. The stock was the top performer in the S&P 500 for the week.

WOLVERINE WORLDWIDEWWW 0.7228915662650602%Wolverine World Wide Inc.U.S.: NYSEUSD33.44
0.240.7228915662650602%
/Date(1427829259199-0500)/
Volume (Delayed 15m)
:
605781
P/E Ratio
25.180559735179056Market Cap
3422488411.77902
Dividend Yield
0.717060053779504% Rev. per Employee
418348More quote details and news »WWWinYour ValueYour ChangeShort position
(WWW) already has its "boots on the ground" in most countries around the globe. Now, with a pending acquisition that will nearly double the company's size, Wolverine is moving to send more Sperry Topsiders and Stride Rite toddler shoes just as far and wide.

Founded in 1883 and the keeper of such sturdy American shoe and boot brands as Sebago, Merrell, Bates, Hush Puppies and, of course, Wolverine, the Rockford, Mich.-based company has teamed with two private-equity firms to acquire
Collective Brands
(PSS), the parent of Payless shoe stores and footwear brands Sperry, Stride Rite, Saucony and Keds.

Of the $2 billion, or $21.75 in cash, being paid for Collective, Wolverine is handing over $1.23 billion for the "Performance & Lifestyle Group," a bold, debt-financed gambit for Wolverine, whose own market value is $1.9 billion. The private-equity partners will take on the Payless business.

Wolverine shares initially popped from around $39 to above $44 after the deal was unveiled May 1, but they've since receded to $38.37. The stock is now modestly valued below 13 times expected earnings for 2013 and doesn't fully reflect the profit and operating-efficiency opportunities that should arise from the acquisition, which is due to close late this year.

As investors become more focused on the potential benefits of this broader brand portfolio under a proven management team at Wolverine, the stock could approach $50 by the first anniversary of the deal's completion, says Charles Kantor, portfolio manager at Neuberger Berman.

The market's initial hesitation appears to be the result of the full price being paid and the hefty debt load that will finance it. The purchase price for the brands amounts to 10 times their expected earnings before interest, taxes, depreciation, and amortization, or Ebitda, for this year. And the $1.1 billion in new bank debt will turn the presently debt-free balance sheet of Wolverine to a leverage ratio of 4.5 dollars in debt for each dollar of Ebitda.

Yet this is the rare deal that's guided by tight strategic logic and a relatively clear path to an attractive payoff. Today, Wolverine's established brands—centered on rugged designs and skewed toward male customers—generate nearly a third of their revenue outside North America. Its new brands, mostly casual shoes for female buyers, today only derive about 10% of sales from overseas.

The idea is to bolt the valuable new brands on to Wolverine's strong international distribution, licensing, and outsourcing resources to accelerate their growth. The company has estimated that the deal will produce 25 to 40 cents a share in incremental earnings in 2013, atop its standing guidance of $2.70 to $2.80 in per-share earnings. Those "synergies" will roughly double in 2014, and even these forecasts could prove conservative, given Wolverine's superior cost and pricing discipline, which produce pretax margins nearly twice as high as the brands being bought.

If so, it would mean per-share profits approaching $4 in 2014. At Wolverine's average price-to-earnings multiple over the past five years around 13 times, the stock would go to the $50 target that only a couple of Wall Street's more bullish analysts are venturing to predict. Perhaps a few more skeptics will be converted by an update on the strategy expected to come with Wolverine's second-quarter earnings report on Tuesday.

-- Michael Santoli

SOME SAVVY FOLKS AT BMO CAPITAL are turning quite sour on computing and communications equipment. Analysts Tim Long and Keith Bachman last week cut their estimates for the networking and computer hardware sectors, respectively, warning of broad threats to results for the just-ended June quarter. They cited a "cautious" IT spending environment and adverse foreign exchange effects.

In the case of disk drives, it's hard to keep up with reality. Bachman trimmed his sales estimate for the year to $16.8 billion from $19.93 billion previously, and cut his EPS number.

Right after he did, Seagate actually cut its outlook for the quarter just ended, prompting several other analysts to lower estimates.

Among the factors weighing on drive shipments, Bachman cites a weak PC market. "Distributors we have spoken with recently have indicated that inventory is at the high end of desired ranges," he says. "Further, as we have previously stated, we think Windows 8 will prove to be disappointing this year."

-- Tiernan Ray

Explosion

The Fourth of July turned out to be a dud. A nosedive on Friday's weak employment report sent the Dow to a 0.8% decline on the week, to 12772.47.